New York University, School of Law, Institute for Policy Integrity / by Michael A. Livermore, Elizabeth Piennar, and Jason A Schwartz
[From the Executive Summary] …This report examines the use of job impact analysis by the federal government and advocacy groups, discussing how cost-benefit analysis can incorporate regulatory effects on layoffs and hiring, and how job impact models can be used and misused in the public policy debate. On the basis of this analysis, several recommendations are offered:
1. Job impact analysis is not an alternative to, or substitute for, cost-benefit analysis. Rather, employment effects should be incorporated into cost-benefit analysis on the basis of traditional economic principles.
2. The difference between short-term and long-term unemployment should be taken into account when determining the economic costs of layoffs.
3. The potential for regulations to positively and negatively affect workers should be recognized.
4. Economic models used to predict employment effects should be well suited to the type of regulatory effect being estimated (e.g., regional versus nationwide and multi-sector versus single industry).
5. Uncertainty surrounding model predictions should be acknowledged by analysts and policymakers, and all assumptions and modeling choices should be disclosed.